UK Launches Digital Securities Sandbox Under New Financial Services Act

Eligible financial market entities can test emerging technologies for a five-year trial period under modified regulatory requirements.

The UK Treasury has launched a new 'digital securities sandbox' (DSS) under the Financial Services and Markets Act, which goes into effect January 8, 2024.
The DSS regulations will enable eligible financial market entities to participate as 'sandbox entrants' that can carry out approved activities using developing technologies for a trial period of five years under modified regulatory requirements.
Entities approved to participate can conduct activities related to digital securities, including maintenance, notary services, and settlement.
Eligible entities that can apply as sandbox entrants include UK investment exchanges, central securities depositories, multilateral trading facilities, and organized trading facilities.
The Financial Conduct Authority (FCA) and Bank of England (BoE) will oversee sandbox participants throughout the duration of the trial period.